S&P downgrade warning erases 162 pts from Sensex
The BSE benchmark Sensex fell by over 127 points in opening trade on emergence of profit selling by funds and retail investors amid a weakening trend on Asian bourses.
In knee-jerk reaction to S&P's rating downgrade threat, the Sensex on Wednesday nosedived by 162 points to close at 18,631.10 on across-the-board selling, particularly in power, banks and PSU shares.Ratings major Standard & Poor's downgrade warning of "at least a one-in-three likelihood" of a downgrade of India's sovereign rating within the next 24 months comes a day after IMF slashed the country's growth forecasts for 2012 to 4.9%, dampening the fragile sentiment further.After resuming over 100 points lower, the BSE benchmark index failed to stage a recovery amid fresh concerns over the sluggish global economic growth and Eurozone debt crisis.Rupee also wilted under pressure and fell below 53-mark against the US dollar due to FII outflows, traders said."The S&P rating downgrade is speculative and probably a pressure tactic for more reforms. In any case, downgrades are not taken well," said Kishor P Ostwal, CMD, CNI Research Ltd.With 27 stocks of the 30-share Sensex ending lower, the Sensex closed near day's lows at 18,631.10, down 162.26 points or 0.86%. Likewise, NSE Nifty fell below 5,700 level by losing 52.45 points, or 0.92%, to 5,652.15.S&P analysts Takahira Ogawa and Elena Okorochenko today said factors forcing a downgrade would be a drop in growth prospects, deterioration on the external front, worsening of the political climate and slow movement on fiscal reforms.SBI, which dropped 2.32%, was the biggest loser among Sensex. It was followed by Tata Power, Hindalco, BHEL, NTPC and M&M. Wipro fell by 1.72% while Infosys fell 1.3% ahead of September quarter results on Friday.Private lenders HDFC Bank and ICICI Bank dropped around one% each. However, ITC, RIL and Hero MotoCorp bucked the negative trend.Total market breadth was sharply weak as 1,929 stocks closed with losses while 978 finished with gains.Barring FMCG index, the other 12 sectoral benchmarks today fell. Realty shares were hit hard after DLF tanked 5%.Dealers said a weakening trend in the Asian region and lower opening in Europe also hit the domestic market trading.